Fewer 0% credit card deals

Andrew Hagger comments on the latest credit card research from Moneynet.co.uk: With bad debts top of the agenda for most credit card lenders, it's no surprise to see that the number of interest free balance transfer deals has started to decline. It's not just the total number of 0% balance transfer cards that have fallen away, but we've also seen the number of longer term (1 year+) offers chopped too.

Moneynet research reveals that four years ago there wasn't a single 0% balance transfer deal with a term of 12 months or more, whereas last year the number had risen to 39, a figure that has since dropped back to 24 today.

So whilst the balance transfer market is by no means dead, the shorter length 0% balance transfers of 5 or 6 months that were common place four years ago have little appeal now.

The average balance transfer fee today will have something to do with this as at a shade under 3% (2.92%), it equates to two months interest at today's average purchase APR of 17.32% - so a 5 or 6 month deal is hardly worth the effort.

The knock on effect of the recession and surging unemployment is that defaults are hitting lenders hard and impacting on their profit margins, one of the main reasons that credit card rates remain stubbornly high even though base rate has been slashed to a record low.

Although the average rate for card purchases has remained virtually unchanged in the last year, the rate for cash transactions is up another 1.3% in the last 12 months and a massive 7% in the last four years.

Whilst there are still 0% deals to be found, lenders have become ultra cautious and only the very best customers will now have a chance of being accepted for these cards.

0% balance transfers still make financial sense if used correctly, and if you have a spotless credit record you may still be able to play the tarting strategy for a while longer.